Reflections on the contemporary church, culture, Christian philosophy and doctrine.

Monday, June 29, 2015

Some Clarity on Tax Exempt Status, Part One

More than once in our not-so-small hamlet of Colorado
Springs public initiatives have been launched to tax non-profits in order to
make up for the revenue shortfall the city consistently faces. Each time it
happens the public argument is something to the effect that churches need to
pay their fair share. Currently, with the SCOTUS ruling on Same Sex Marriage
(SSM), the argument is being made that religious organizations ought to lose
their tax exempt status because they (in reality, many but not all of them) do
not conform to the newly minted SCOTUS ruling. Again the point is made directly
- churches need to "start paying taxes."

I think a little clarity is in order (though, I must
admit to a great deal of skepticism about the effectiveness of argument in our
highly emotionalized culture right now).

We Pay Taxes

I am a pastor of a church and I helped to start a
charitable non-profit that provides long-term support, education, and ministry
to girls rescued from human trafficking in the US. I currently run and have run
non-profits that own property, operate under state and federal tax guidelines,
and hire people. We pay several forms of taxes and our employees pay taxes. We
are exempt from a fairly narrow set of tax categories for which charitable
non-profits must apply and prove they are eligible, and for which churches
agree to a trade-off with the Federal government represented in the
restrictions of the Johnson Amendment.

Having said that, I will say that the exemptions we are
eligible for are a great help to churches and non-profits. We often operate on
smaller budgets and different income structures than a typical business, so
several tax categories are a significant barrier to entrance and a barrier to
efficient non-profit work. For example, many people who give to non-profits are
careful to pick organizations who can prove that the vast majority of their
gifts go to the work and not to overhead. Overhead includes things like staff,
taxes related to hiring staff, office needs, and office space. If your favorite
non-profit began paying property tax, the percentage of your gift going
directly to the work would necessarily decrease, often significantly.

There Are More Non-Profits Out There Than You Know

Did you know that many non-profits are news organizations
and journalists' offices? Are you cognizant of the neighborhood recreation
centers that run on paper thin budgets and are non-profit? Do you know that universities
and colleges (with very rare exceptions) are non-profits? So, returning to the
well-meaning but ignorant people in Colorado Springs who sponsored those
petitions to remove tax exempt status from non-profits, when confronted with
these details they did not know that they would likely put the liberal Peace
And Justice Mission office out of business or shutter the soup kitchens run by
the Catholic church they supported so much.

This brings us to the present push and the inherent
tyranny contained within it. The current proposal is to remove tax exempt
status from religious organizations, and more specifically, religious organizations
that do not tow the line on SSM. So maybe the neighborhood community center is
not affected, but what about the Episcopalian church and Southern Baptist
church across the street from each other? The current argument has the
implication that one is favored over the other for an ad hoc reason. One accepts
SSM and the other does not, and based on that alone proponents of SSM want to
discriminate and do harm. Why SSM? Why not the SCOTUS rulings on
gerrymandering? Or the SCOTUS rulings on abortion, Civil Rights legislation,
campaign finance reform, and so forth? In other words, there are hundreds of
issues that could be picked on to discriminate with the power of Federal and State
taxation, but this one has been picked by people drunk with current cultural
power and who want to strike while the iron is hot.

As this particular form of tax discrimination moves
forward be attentive to this form of argument, "You can keep your tax
exempt status as long as you agree with us about X." This is tyranny and coercion
pure and simple, which brings us to our last point.